Morgan Stanley Lowers Nvidia’s Stock Price Target Following Historic Drop

Morgan Stanley reduced Nvidia’s stock price target on Tuesday, lowering it from $166 to $152. The decision reflects investor concerns following the launch of DeepSeek’s artificial intelligence (AI) model.

The firm’s analysts adjusted Nvidia’s valuation multiple from 35x to 32x, citing broader questions surrounding AI efficiency, export controls, and short-term demand.

NVDA/USD

Nvidia is currently transitioning from its existing product generation (Hopper) to the upcoming one (Blackwell). Such transitions often lead to demand volatility, as customers may delay purchases while waiting for the release of new technologies.

DeepSeek Explained

DeepSeek, a Chinese AI company, recently unveiled an AI model developed with significantly lower-cost hardware, raising concerns about potential shifts in the AI investment landscape. Morgan Stanley noted that Nvidia acknowledged, “DeepSeek’s work demonstrates how new models can be created using this technique, leveraging widely available models and computational resources that fully comply with export controls.”

The bank also emphasized that the Chinese market remains a key revenue driver for Nvidia, despite U.S. export restrictions.

While Morgan Stanley lowered Nvidia’s price target, it remains optimistic about the long-term outlook for AI semiconductors, highlighting strong underlying demand. U.S. export restrictions on China have posed challenges for companies like Nvidia, which rely heavily on the Chinese market. However, Nvidia has shown adaptability, as evidenced by its ability to comply with these regulations.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.